Huawei's headquarters in Shenzhen, a designated special economic zone that was the laboratory for China's experiments in economic liberalization.
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Huawei says it would never spy on the U.S. Countries from South Korea to the U.K. have used its gear without incident. "There is no evidence that Huawei has ever been complicit in abetting or conducting espionage on anyone," says Eric Anderson, author of Sinophobia: The Huawei Story and a professor at the National Intelligence University in Washington, a federal institution that trains national-security officials.
But fears that China is seeking opportunities for digital skulduggery have been exacerbated by the recent explosion in Chinese cyberattacks on the U.S. government and businesses. In recent weeks President Barack Obama and Treasury Secretary Jack Lew have both warned China to stop its online aggression, and Defense Secretary Chuck Hagel in March called for U.S. intelligence assets to be repositioned from the Middle East to Asia to protect against the growing threat. In February a U.S. security firm accused the PLA of running a massive hacking ring. (There's also alarm about old-fashioned spying. In the past year alone, the Justice Department has charged more than 100 individuals or corporate defendants with stealing trade secrets or dual-use technology for China or Chinese entities.) With the links between Huawei and the Chinese state and military still murky, its critics are convinced that the company is a Trojan horse. As a major global telecom player, Huawei is certainly too big to ignore. Is it also too big to trust?
The controversy over Huawei is, in part, a product of the broader decline in American manufacturing. The U.S. telecom industry, like so many others, is increasingly reliant on Chinese manufacturing. While Cisco Systems is a major player, most companies in the industry are not American but Swedish (Ericsson), French (Alcatel-Lucent), Finnish (Nokia Siemens) or, in Huawei's case, Chinese. In 2006, Alcatel acquired what had been the U.S. leader, Lucent Technologies.
To the Chinese, Huawei's rise is a prime example of the country's ability to rapidly catch up to the West. To its critics, Huawei is a creation of the Chinese government, not free-market ingenuity. A 2005 report from the Rand Corp. characterized Huawei as part of a "digital triangle" composed of commercial technology companies, state research institutes and the Chinese military, all aimed at upgrading China's defense capabilities. Huawei denies having any special ties to the PLA. Never having listed on any stock exchange, its management is not obligated to share its finances or other information about the company. Under a persistent spotlight, the firm has started opening up by printing an annual report with financial statements and hiring an army of smooth-talking spokespeople. Although TIME was allowed to interview some managers, repeated requests over several months to meet top Chinese executives at Huawei were rebuffed.
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